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Core economies struggle in factory downturn

Friday, November 02, 2012 - 01:14

Nov.02 - Euro zone manufacturing shrinks for the 15th month running in October as output and new orders fell, likely fuelling expectations of further easing from the European Central Bank. Ciara Sutton reports.

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Euro zone manufacturing shrank for the 15th month straight as output and new orders fell. Manufacturers were the driving force behind the bloc's recovery from the last recession, but the downturn in factory activity has now engulfed core members. Europe's largest economy, Germany's manufacturing sector shrank for the eighth month. And French figures showed a decline in all but one of the last 15 months. In Spain the pace of decline accelerated. Barclays' Henk Potts says the gloomy data comes as no surprise. (SOUNDBITE) (English) HENK POTTS, SAYING: "I think the expectation is the model you see within Spain is unsustainable and eventually they will have to bow to pressure in order to take the international bailout that is required. Now Spain as you can imagine are fighting very hard on the conditions that revolve around that but I think it's almost inevitable at some stage they will have to bow to that pressure and take the international bailout." Massive unemployment has hammered consumer and business sentiment in Spain with the economy likely to remain in recession next year. A Reuters poll suggests flagging growth prospects for the euro zone's biggest economies will prompt the ECB to cut interest rates to a new record low.

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Core economies struggle in factory downturn

Friday, November 02, 2012 - 01:14